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Cerberus Capital Management to invest in foreclosed homes

2 Apr 2013

house5_sqPrivate equity firm Cerberus Capital Management is reportedly looking to capitalise on an expected rebound in the US housing market by backing small investment firms focused on buying foreclosed homes.

Cerberus will support firms that are buying homes in niche markets in the US to rent them out, said Reuters. It expects to invest up to $25m per firms, which will normally have between one and four residential properties in their portfolio.

It added that such investors can not tap the much larger financing deals from Deutsche Bank, Credit Suisse, Goldman Sachs Group and other major banks for institutional buyers of foreclosed homes.

Large institutional investors such as Blackstone – which has already acquired 20,000 homes – and Colony Capital are set to spend $10bn over the next two years on foreclosed single family homes.

The increased investment in the real estate sector coupled with a decline in the number of foreclosed homes coming on the market has driven up home prices.

The Case-Schiler index, which tracks housing prices in America’s largest cities, rose at the fastest pace since 2006 in January.

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